The misguided campaign to undermine OTAs and innovation

By John B. Wood

Jul 05, 2018

In government contracting, it is a truism that significant challenges to the status quo invariably create pushback. But the status quo in government IT is inertia, and in a world of constantly evolving cyber threats, this creates greater risks and vulnerabilities. Our enemies in cyberspace are not standing still. Why should federal agencies?

A recent Government Accountability Office report confirmed that for every budget dollar spent on federal IT systems, about 80 cents goes to maintaining older legacy systems. Only 20 cents goes to purchasing modern, innovative and secure federal IT. This is a problem acknowledged across the federal government.

Unfortunately, there is simply too much money to be made in maintaining the status quo for reform efforts to go unchallenged. To be blunt, the federal IT budget is projected to exceed $90 billion dollars, and with 80 percent of that going to legacy IT spending, there's a massive revenue stream that entrenched incumbents want to protect.

Given these dynamics, it is not surprising that one of the most interesting, and potentially revolutionary, acquisition methods in recent years has come under attack. Other Transaction Authority, or OTA, seeks to break the stranglehold of the existing cumbersome acquisition system and enable federal IT pros to acquire technology at the speed of relevance.

OTAs have actually been around for quite a while, going back to the National Aeronautics and Space Act of 1958. Congress and the White House, realizing that NASA's procurement process had to be accelerated if the U.S. was going to develop the cutting-edge technologies needed to win the space race, specifically provided for OTAs.

The urgency of IT acquisition in 2018

A similar urgency exists now in the cyberspace race. The recent "Federal Cybersecurity Risk Determination Report and Action Plan," designed in part to implement President Donald Trump's May 2017 executive order on cybersecurity, says explicitly that "two of the most significant areas of risk that were identified in agency assessments were the abundance of legacy information technology, which is difficult and expensive to protect, as well as shortages of experienced and capable cybersecurity personnel."

The breathtaking pace at which our adversaries deploy new offensive cyber tools and techniques has sprinted past our existing legacy IT systems, which cannot be modified fast enough to make them secure. To fight back, we need the ability to procure new technologies to keep pace with the development of new technologies.

Congress realized this urgency several years ago, when it authorized the use of accelerated (or "rapid") acquisition authorities in the National Defense Authorization Act. It did something truly brilliant – it tied accelerated acquisition authorities with the ability of the agency to take a prototype directly to production using Other Transaction Authority.

That's where OTAs can be enormously beneficial to federal agencies. But according to a recent report, agencies are using OTAs for less than $7 billion worth of contracts. Given how much the government spends on IT, that figure should grow exponentially.

OTAs are critical to modernization

One key benefit of OTAs is that such procurements are generally not subject to bid protests. That's why it was surprising that the GAO recently upheld a legacy vendor's protest against an OTA production award to REAN Cloud, a relatively new player in the contracting arena.

In the REAN Cloud case , GAO decided that the Army shouldn't have used an OTA for production because the initial prototype contract didn't say whether a follow-on production deal would occur (which is required for these contracts). Also, GAO found the prototype phase of the program had not been completed before the production deal was cut (another requirement under the rules).

Certainly the Army could have followed procedure by identifying potential production plans in the initial contract. But on the second point, is GAO (or Congress) qualified to second-guess when the warfighter has obtained enough information to deem a prototype "complete"?

Consider also recent congressional efforts to impose burdensome reporting obligations for OTA use, specifically requiring justification for each OTA production contract and transaction and establishing a 30-day hold on any obligations to allow time for congressional review. These requirements will only act as a disincentive for private-sector innovators and DOD agencies to collaborate.

It is clear there is a campaign underway by entrenched, legacy IT incumbents to curtail, rather than expand, the use of OTAs. These incumbents are looking out for their bottom line, instead of focusing on helping agencies meet critical mission goals.

It is widely recognized that OTAs enable the government to rapidly obtain innovative technology needed to achieve their missions. Efforts to undermine their use is unproductive for the DOD and unfair to the warfighter and the taxpayer.

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